Fed probe focuses on Swearengin's dogged misuse of block grants for code enforcement

The ghost of Measure G haunts the latest investigation into City Hall’s bungling of federal funds designed to help the poor.

That was my thought after reading the HUD inspector general’s 48-page report on Fresno’s long-running mismanagement of Community Development Block Grants.

I summarized the report two days ago in CVObserver. In a nutshell, the IG says City Hall spent more than $8 million of CDBG funds over a period of years on things that either didn’t meet HUD standards or weren’t adequately documented to HUD officials.

SEE ALSO: HUD probes Fresno’s $8mil block grant mismanagement

City officials say they take the report seriously. They also say everything will turn out fine in the end. In other words, Fresno taxpayers won’t have to send an $8 million repayment to Washington, D.C.

The IG report identifies one area in particular where City Hall went wrong. Mid- and low-level city officials charged with spending CDBG money were poorly trained and/or in a job over their heads, the report states.

But the one person who gets a free pass in this analysis is the one person most responsible for the disaster: Ashley Swearengin.

The IG report describes mismanagement of CDBG funds from 2012 through 2016. The report also refers to a 2012 HUD report that revealed City Hall mismanagement of millions of CDBG dollars in 2010 and 2011.

Swearengin was mayor during these years. The City Charter is clear – the buck stops with the mayor.

The IG report also makes clear that HUD was in fairly constant contact with City Hall over the past five years regarding CDBG problems.

On top of that, the Community Development Block Grant Program is nothing new to City Hall. The program dates back to the Richard Nixon era in the early 1970s. It’s safe to say that no mayor or council member in Fresno over the last 45 years has been ignorant of the complexity or importance of CDBG regulations.

Yet, according to the IG report, Fresno botched its administration of CDBG money year after year during the Swearengin era.

What was Swearengin thinking?

One of the IG’s beefs is City Hall’s unauthorized or undocumented use of CDBG money for code enforcement activities.

From the IG report: “Between fiscal years 2012 and 2014, the City allocated $139,071 in salaries for the tire team to CDBG. According to the City’s website, the tire enforcement program was funded by the City’s general fund and the California Integrated Waste Management Board. The City received four State-sponsored grants for waste tire enforcement, amnesty, and cleanup during the years 2012 and 2015, amounting to $670,000, yet it allocated salaries for its tire team staff to the code enforcement budget. City staff believed that this occurred because there was not sufficient funding from the State-sponsored grants to cover salaries; therefore, salaries were shifted to CDBG.”

You can’t do this with CDBG money, the IG says.

Here’s another example. The IG found that City Hall from 2012 to 2014 conducted citywide code enforcement with HUD funding.

For starters, the IG says, what’s with this spending of CDBG money in non-blighted neighborhoods?

On top of that, the IG says, City Hall made no effort to measure whether CDBG-funded code enforcement efforts in blighted neighborhoods was actually doing anything to improve the neighborhoods.

The IG has a lot more to say about CDBG money and code enforcement. But you get the picture.

From the report: “The Development and Resource Management Department director relied on her staff to prepare the necessary documentation. However, she failed to follow up to ensure that it was completed. As a result, the City disregarded and continued to disregard HUD requirements and had not ensured that it used CDBG code enforcement funds to arrest the decline in deteriorating or deteriorated areas, despite HUD’s having questioned these matters in two prior monitoring reviews…. Instead, it used the funds to supplement its code enforcement activities that it could not distinguish from regular responsibilities as a unit of general local government.”

Think back to the years 2010, 2011, 2012 and 2013. We were in the Great Recession, right?

I know – economic historians will say the Great Recession pretty much ended in late 2009 or early 2010. But as Fresnans have learned over the decades, we’re always laggards when it comes to leaving bad times.

The fear coming out of City Hall in 2010 and 2011 and 2012 was municipal bankruptcy. By all accounts, Swearengin and the City Council did a masterful job of guiding the city through that storm.

At the same time, Swearengin was keen on fulfilling her No. 1 promise made during the 2008 mayoral campaign – fix inner-city Fresno.

Code enforcement was to be a major tool in that effort. Code enforcement takes people. People need to be paid.

Swearengin didn’t have the money. Well, she didn’t have the general fund money.

Keep in mind that CDBG money comes with a thick book of regulations but it’s basic purpose is simple: Clean up the blight in poor neighborhoods or boost the economic prospects of poor neighborhoods.

Swearengin was 100 percent behind those goals. She wasn’t shy about publicly proclaiming the value of code enforcement in achieving those goals.

Now, what follows is my speculation. I can’t help thinking that Swearengin, City Manager Mark Scott, Assistant City Manager Bruce Rudd, the entire City Council and City Attorney Doug Sloan (and, before him, Jim Sanchez) were well aware during these years that they were playing with fire when they focused so much of their CDBG money on wide-ranging code enforcement activities. They knew HUD viewed their actions with a jaundiced eye. But, they figured they could survive the scrutiny.

Swearengin didn’t want a recession to delay her good work in inner-city Fresno.

But by late 2012, I’m guessing, Swearengin and her team knew they’d have to compromise at least a little with HUD. By that time, the first scathing HUD report had been made public. Swearengin would have to find more general fund money to continue implementing her neighborhood revitalization vision.

Measure G would be her pot of gold.

To be precise, Measure G wasn’t Swearengin’s idea. Measure G was the mid-2013 binding referendum on whether to outsource the city’s residential trash service. Local labor leaders forced the election on Swearengin.

But the privatization of residential trash service was definitely Swearengin’s idea. Why? Because the deal would have brought millions of dollars into the general fund every year from fees paid by a private hauler.

Swearengin during the Measure G campaign made a simple pitch: Privatization was pivotal to avoiding a date in bankruptcy court.

Opponents during the campaign said the Mayor was overselling. The city’s budget is improving, the opponents said. Privatization is a solution in search of a problem, they said.

Voters narrowly rejected privatization.

The IG’s report suggests to me why Swearengin pushed so hard for Measure G. She had to have known that the pressure would be overwhelming to spend new general fund monies on public safety, parks and worker salaries. She had to have known that it would be increasingly hard to spend CDBG money on code enforcement as she had done in previous years.

Perhaps Swearengin viewed trash privatization as an easy way to get enough cash in a hurry to have her cake and eat it, too – greater funding for public safety, parks, salaries plus a reformed funding stream for her beloved code enforcement division.

I close with another quote from the IG’s report. The report includes a copy of City Hall’s response to the IG’s draft audit. The “CPD” in the following quote refers to the Office of Community Planning and Development in HUD’s San Francisco office.

City Hall told the feds: “It was anticipated that the remaining CPD monitoring items were to be resolved by December 2016. However, with the retirement of the CPD director, the timing of the OIG audit, and the City’s capacity to manage several audits, current activities, and complete the 2017-18 Annual Action Planning process during a year of federal budget uncertainty, the resolution has been delayed.”

Swearengin in late 2016 was taking a well-deserved and very public victory lap after eight years in office. She was termed out in January 2017.

Mayor Lee Brand is cleaning up her CBDG mess.